Telemarketers Convicted of Fraud Charges

In what prosecutors call one of the most callous and “egregious” telemarketing frauds, three former salesmen of a Brea boiler-room operation were convicted of fraud for preying on elderly citizens known to be victims of prior scams.

A U.S. District Court jury in Santa Ana convicted the former Nortay Consultants workers late Wednesday in the first trial stemming from last October’s major crackdown on telemarketing frauds aimed at the elderly.

In an operation dubbed Senior Sentinel, federal authorities last fall raided five companies in Orange, Los Angeles and Riverside counties and eventually arrested 15 individuals.

The attack on telemarketing fraud is one of Atty. Gen. Janet Reno’s top priorities, said Assistant U.S. Atty. Brent Whittlesey. A group of federal and state agencies and Canadian authorities are developing an international strategy to combat the boiler-room operations, he said.

The group also uses elderly volunteers to pose as victims. The telephone line of a 92-year-old Phoenix man, for instance, was redirected to a volunteer, who tape-recorded 150 telemarketing solicitations in nine months, including one from Nortay.

Whittlesey has called the Nortay case one of the “most egregious” instances of telemarketing fraud.

Audio tapes and testimony showed that Nortay operators and salesmen posed as investigators promising to collect funds that victims lost in other telemarketing scams--some of which the salesmen themselves had perpetrated, said Assistant U.S. Atty. Ellyn M. Lindsay, who prosecuted the case.

Salesmen bullied and sweet-talked 1,100 victims out of $491,000 over a two-year period that ended April 1995. After hanging up, the salesmen would call the victims “idiots,” “stupid” and “fools.” One 87-year-old Utah man was ridiculed as “Elmer Fudd” after he turned over $8,175 to Nortay to find money he lost in other scams.

Lindsay said that former salesman Jerry Pierre Ste. Marie, 40, of Long Beach, one of four defendants who earlier pleaded guilty, maintained in court that such telemarketing schemes provided “entertainment for the homebound.”

“We got a back-stage look at what they thought of their victims,” she said.

Ste. Marie and co-operator Norman Hefferan, 60, of La Canada Flintridge, had been convicted previously of telemarketing fraud.

Hefferan was on probation from a previous telemarketing fraud conviction while operating Nortay. Lindsay said he made calls with his feet propped up on his desk, revealing the probation-required home detection bracelet on his ankle.

Convicted late Wednesday after a three-week federal trial were former partner and salesman Harold Larsen, 43, of Anaheim, and salesmen Jacob Giffin, 23, of Cypress, and Kristen Leon Hall, 21, of Norwalk. Giffin faces 45 years in prison and the other two face prison terms of 10 years each at their sentencing, which is scheduled for Aug. 4.

Besides Hefferan and Ste. Marie, co-operator Lori Blitz, 43, of Santa Ana also pleaded guilty to mail and wire fraud charges. Ste. Marie is scheduled to be sentenced June 16, and Hefferan and Blitz are to be sentenced May 19.

Prosecutors said former salesman Dennis Choquette, 39, formerly of Anaheim, has agreed to plead guilty to fraud charges in federal court in Denver.

Hefferan, Larsen and Ste. Marie remain in jail pending their sentences.

Larsen, the only defendant to testify, had tried to distance himself from the others. He pointed out that he worked at Nortay for only six months in 1993 and that he believed Blitz and others actually were investigating cases and obtaining refunds for clients, said his lawyer, Jerome J. Goldfein of Santa Ana.

“He’d pick up files and make follow-up calls to ask about letters [Nortay] sent to the people, and they’d say they didn’t get any letters,” Goldfein said.

Larsen plans to appeal his conviction on one count each of mail and wire fraud. Goldfein said he’ll argue that U.S. District Judge Gary L. Taylor erred by allowing evidence of other telemarketing operations where the defendants previously worked and testimony from former workers who said they thought those operations were illegitimate. He also plans to cite errors in jury instructions.

Giffin’s attorney, Craig Wilke, a deputy federal public defender, said his client was a low-paid, low-level employee who was only 19 years old when he started working at Nortay. “He had no knowledge of any fraudulent nature of the scheme,” Wilke said.

Hall’s lawyer couldn’t be reached.